SIIA Report Gives High Marks to Offshore Development

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A new survey shows that companies are increasing their offshore development efforts and rating the deliverables as above average or higher.

The Software & Information Industry Association has published a report on the state of global software development, showing that a vast majority of companies that offshore their development operations report positive impacts on revenues and profits.

For its Global Software Development Survey Report, the Washington D.C.-based SIIA teamed up with Symphony Services, a global product engineering outsourcer, to survey 114 software companies on their use of offshore developers. A majority of respondents said they are achieving between 80 percent and 100 percent of the cost savings goals they set for offshoring.

David Thomas, executive director of SIIA, said the report shows that overall, companies plan to increase their global development efforts. Indeed, the report showed that 75 percent of companies that offshore report a positive impact on revenues and 88 percent report a positive impact on profits. In addition, 84 percent of the survey respondents mentioned growth strategy as an "important" driver for offshoring, with speed to market and productivity as the next most important drivers.

Meanwhile, according to the respondents, there was no single model identified as most optimal for offshore development, as about half of them worked with an offshore provider, one-third said they operate an offshore subsidiary, and about one-fourth of the respondents said they use a hybrid model of both approaches.

In terms of increasing the use of outsourcing, 57 percent of the survey respondents said they have "significantly" increased offshore work in the past 18 months and that they plan to increase it even more in the next 18 months, SIIA officials said.

Also, according to the survey, companies that said they do not offshore their software development gave reasons such as concerns about product quality, loss of control, fear of exposing their intellectual property, and negative impact on internal staff morale.

Yet, two-thirds of the companies that use offshoring said they found the quality of the work to be above average when compared to onshore staff, and 25 percent rated the quality of the offshore development either "excellent" or "outstanding."

"Global software development is in the process of transforming the nature of the U.S. software industry," said Ken Wasch, SIIA president, in a statement. "Our survey covers many of the influences on and results of this sea change."

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Darryl K. Taft covers the development tools and developer-related issues beat from his office in Baltimore. He has more than 10 years of experience in the business and is always looking for the next scoop. Taft is a member of the Association for Computing Machinery (ACM) and was named 'one of the most active middleware reporters in the world' by The Middleware Co. He also has his own card in the 'Who's Who in Enterprise Java' deck.